The New York Civil Liberties Union has filed a proposed class action on behalf of Carl Fanfair and Gloria Antoine, two Black homeowners who are going through foreclosure after falling behind on their mortgage payments during the COVID-19 pandemic
In their class petition, Fanfair and Antoine alleged that the housing court judges dealing with their cases failed to comply with Rule 3408 of the Civil Practice Law and Rules, which requires courts to provide additional protections and foreclosure prevention opportunities to homeowners at risk of losing their homes.
Under the rule, which state legislators enacted in the midst of the 2008 foreclosure crisis, judges must, at the beginning of every residential foreclosure case, convene a settlement conference to determine whether the debtor and the creditor can come to a resolution.
If the homeowner appears at the settlement hearing without an attorney, the court should interpret it as a motion to proceed as "a poor person." In that case, the presiding judge has an obligation to determine whether the homeowner can continue through the foreclosure process unrepresented, or if the court should appoint a lawyer.
But in housing courts in Brooklyn and around the state, courts have failed to implement the rule, the plaintiffs argued in their suit, filed against the New York State Office of Court Administration and Justices Lawrence Knipel and Cenceria P. Edwards in their official capacities.
"When homeowners appear unrepresented at settlement conferences, courts do not deem them to have made poor-person motions and do not determine whether they should be appointed counsel," the petition says. "Instead, courts press ahead with the proceedings, leaving the homeowners to fend for themselves as they face the loss of their homes."
The plaintiffs also accused the administrators' office of flouting Rule 3408's requirement to provide pro se homeowners notice that they have a right to an appointment-of-counsel determination, and of failing to comply with the state law's directive to train the court-appointed referees overseeing settlement conferences under the rule.
Lucian Chalfen, a spokesman for the state courts, declined to comment on the suit's allegations.
"Courts are putting vulnerable families at risk of exploitation and permanent displacement from their homes and communities," Terry Ding, staff attorney at the New York Civil Liberties Union, which represents the plaintiffs, said in a statement announcing the class action. "Having an attorney can make a significant difference for homeowners facing foreclosure. With this lawsuit, we want to ensure New Yorkers have a fighting chance to save their homes."
The NYCLU said homeowners of color were overrepresented in foreclosure proceedings, a fact the organization attributed to discriminatory housing practices such as redlining and predatory lending that historically targeted them.
About 45% of New York homeowners appeared at foreclosure settlement conferences without legal representation from October 2021 to October 2022, according to a report by the state's court system.
In Brooklyn, delegated referees preside over foreclosure settlement conferences on behalf of the assigned judges.
In the suit, Fanfair and Antoine alleged that Justice Knipel, in his capacity as the Brooklyn court's administrative judge for civil matters, failed to ensure that referees were trained to apply Rule 3408.
The plaintiffs also alleged that Justice Edwards, who presides over residential mortgage foreclosure cases in New York City Civil Court in Brooklyn, routinely failed to appoint counsel to homeowners who appeared before her unrepresented.
At least 19 out of 42 homeowner defendants whose cases were assigned to Justice Edwards showed up without a lawyer at initial settlement conferences held virtually on Feb. 28 — more than 40%. On certain days between April and June, the rate of pro se defendants reached nearly 50%, the suit says.
"In every one of these cases, the referee failed to notify the homeowners of their rights under Rule 3408," the petition says. "Unaware of their right to a determination to proceed as poor persons and appointed counsel, many pro se homeowners go through their entire foreclosure cases without attorneys to counsel them through the complicated, confusing and daunting process."
Fanfair, 47, owns a brownstone in Bedford-Stuyvesant, a historically Black neighborhood of Brooklyn, and has lived there with his family for over 20 years. During the pandemic, he lost his job as an electrician and fell behind on his mortgage payments.
In January, Fanfair learned that a foreclosure case had been filed against him after people rang him up to inquire about the sale of his property. Because he couldn't afford an attorney to represent him in the case, which was assigned to Justice Edwards, he appeared pro se at the initial settlement hearing. The appointed referee never referred his case to the judge for a determination on whether he needed counsel, the petition says.
"Our home means everything to our family. My children have many happy memories growing up here, running around the house before Sunday dinners," Fanfair said in a statement following the class action's filing. "We need to do everything we can to keep Black families like mine in their homes and make sure we can pass properties on to our kids. This starts with providing struggling families facing foreclosure a chance to have a lawyer."
Antoine, 59, has owned a two-story house in the Canarsie section of Brooklyn since 2004. The pandemic caused her income as a day care employee to evaporate and her tenant's missed rent payments made it impossible for her to keep up with her mortgage obligations.
She also appeared unrepresented at a hearing in civil court after foreclosure proceedings were filed against her in August. As in Fanfair's case, Antoine was never referred to Justice Edwards, who was in charge of her case, for a poor-person status determination, the petition says.
Ding told Law360 that the class action takes aim at systemic racism by seeking to enforce a law that could help avoid foreclosures, which Black homeowners face significantly more than other racial groups.
According to a study by the Center for Responsible Lending, a nonprofit, over 240,000 Black homeowners in the United States lost their homes to foreclosure during the financial crisis that unfolded from 2007 to 2009. A study by the Urban Institute found that during that same period, the wealth of Black households fell by an average of nearly 48%, compared with about 29% of white households.
The pandemic exacerbated the wealth gap, the petition says.
According to U.S. census data cited in the petition, by March 2022, 9.4% of Black homeowners in New York State said they thought they were very likely to lose their homes to foreclosure in the next two months, almost three times as high as the rate of white homeowners who said the same.
Foreclosure court filings have ballooned since January of last year, when a moratorium on residential foreclosure actions meant to help homeowners weather the pandemic expired. Brooklyn had by far the highest number of pre-foreclosure filings of any New York City borough in the first quarter of 2023, the petition says.
The plaintiffs said in their petition that if courts comply with Rule 3408, fewer foreclosures will occur.
"In a nutshell, this case is about the court system's failure to implement protections for homeowners facing foreclosure that the New York Legislature required courts to enforce," Ding said. "If these procedural protections in the law are not enforced, it's Black homeowners who are disproportionately suffering the harm and losing their homes."
In a phone call with Law360, Fanfair declined to comment on the suit.
Counsel information for the Office of Court Administration and the justices was not immediately available on Wednesday.
The class members are represented by Terry T. Ding, Daniel R. Lambright, Ifeyinwa K. Chikezie and Christopher T. Dunn of the New York Civil Liberties Union Foundation, Yolande I. Nicholson of Yolande I. Nicholson PC, Joshua Karsh and Michael Lieder of Mehri & Skalet PLLC, and Matthew L. Berman of Valli Kane & Vagnini LLP.
The case is Fanfair v. Knipel, case number unavailable, in the Appellate Division of State Supreme Court, Second Department.
--Editing by Karin Roberts.
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